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ella [17]
3 years ago
12

You just turned 35 and have been saving for an around-the-world vacation. You want to take the trip to celebrate your 40th birth

day. You have set aside, as of today, $15,000 for such a trip. You expect the trip will cost $25,000. The financial instruments you have invested the $15,000 in have been earning, on average, about 8%. (You may ignore income taxes). (a) Will you have enough money in that vacation account on your 40th birthday to take the trip? What will be the surplus or shortfall in that account when you turn 40? (b) If you had to, you could further fund the trip by making, starting today, five annual $500 contributions to the account. If you adhere to such a plan, how much will be in the account on your 40th birthday?
Business
1 answer:
Olegator [25]3 years ago
8 0

Answer:

(a) No, there is a Shortfall = $2,965

(b) $25,202.95

Explanation:

As provided current balance: $15,000

Current return on investment = 8%

Assumed this is compound interest as no amount is withdrawn in between.

Therefore, future value of $1 after 5 years @ 8% compounded per year =

1.469

Value of $15,000 on the date of 40th Birthday = $15,000 \times 1.469 = $22,035

There is a shortfall in the budgeted amount = $25,000 - $22,035 = $2,965

If $500 annual contributions are made in the same account then value shall be:

Value of $15,000 = $22,035

Value of $500 = Value of $1 after 5 years = $6.3359

= $500 \times 6.3359 = $3,167.95

Then total balance in account = $22,035 + $3,167.95 = $25,202.95

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allsm [11]

Answer:

$68 appears as the amount unearned but received (or still paid in advance) in the closing statement

Explanation:

Amount received in advance = $100

Amount earned = $32

Amount (in advance at closing) is the difference between the amount originally paid in advance and the amount earned

Amount (in advance at closing) = $100 - $32

                                                    = $68

The amount that will appear in the closing statement as rental payment still in advance is $68.

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3 years ago
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Answer:

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7 0
2 years ago
Which of the following statements is TRUE?
shusha [124]

Strategic partnerships are seen as one of the foundations of supply chain management.

5 0
3 years ago
Unilever has a subsidiary in Japan. The valuation of this MNC should
Vlad [161]

Answer: increase; appreciate.

Explanation:

A multinational firm is regarded as a firm that's located in different countries. It should be noted that the valuation of this multinational company should

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8 0
3 years ago
The Doral Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at $0.50 per unit. The fixed costs a
SVEN [57.7K]

Answer:

Operating Income = $100,000

Explanation:

1 a. What is the current annual operating income?  

Revenue - 5,000,000* $0.5 = 2,500,000

Less: Variable Costs - 5,000,000*$0.3 = 1,500,000

Contribution = 1,000,000 (margin = 1m/2.5m = 40%)

Less: Fixed Costs ....$900.000

Operating Income = $100,000

b. What is the present break even point in revenues?  

BEP = FC/Contribution Margin = 900,000/0.4 = $2,250,000

2. A $0.04 per unit increase in variable costs  

Revenue - 5,000,000* $0.5 = 2,500,000

Less: Variable Costs - 5,000,000*$0.34 = 1,700,000

Contribution = 800,000

Less: Fixed Costs ....$900.000

Operating Income = ($100,000)

3. A 10% increase in fixed costs and a 10% increase in units sold  

Revenue - 5,500,000* $0.5 = 2,750,000

Less: Variable Costs - 5,500,000*$0.3 = 1,650,000

Contribution = 1,100,000

Less: Fixed Costs ....$990.000

Operating Income = $110,000

4. A 20% decrease in fixed costs, a 20% decrease in selling price, a 10% decrease in variable cost per unit and a 40% increase inunits sold.  

Revenue - 7,000,000* $0.4 = 2,800,000

Less: Variable Costs - 7,000,000*$0.27 = 1,890,000

Contribution = 910,000

Less: Fixed Costs ....$720.000

Operating Income = $190,000

5.Compute the new breakeven point in units for each of the following changes:   A 10% increase in fixed costs  

BEP = FC/Contribution Margin = 810,000/0.4 = $2,025,000

6. A 10% increase in selling price and a $20,000 increase in fixed costs

Revised Contribution Margin = 0.55 - 0.3 = 0.25; 0.25/0.55 = 0.4545

BEP = FC/Contribution Margin = 1080,000/0.4545 = $2,376,238

8 0
3 years ago
Read 2 more answers
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